How we calculate cash flow
Period cash flow shows how much money actually came in and went out, and what balance remains at the end. It's cash basis, not accrual basis.
Use the Cash Flow CalculatorFormula
net flow = inflows − outflows
ending balance = starting balance + net flow
Variables
- starting balance
- Cash available at the beginning of the period; can be negative.
- inflows
- Payments received during the period.
- outflows
- Payments made during the period.
Step-by-step calculation
- We add inflows and subtract outflows to find the net flow.
- We add the net flow to the starting balance.
- We compare inflows and outflows as bars to show the proportion.
Worked example
Inputs
- Starting balance: $3,000
- Inflows: $12,000
- Outflows: $9,500
Calculation
net flow = 12,000 − 9,500 = 2,500
ending balance = 3,000 + 2,500
Ending balance of $5,500 with a positive net flow of $2,500.
Common mistakes
- Recording invoiced but not-yet-received sales as an inflow.
- Forgetting annual outflows that fall within the period, like taxes and insurance.
Frequently asked questions
Are profit and cash flow the same thing?
No. You can have profit on paper and negative cash when receipts take longer than payments.
All values are in US dollars (US$). Results are estimates and do not replace professional advice.